While in Wonderland, Alice meets the Red Queen and discovers that running just leaves you where you were.

“Well, in our country,” said Alice, still panting a little, “you’d generally get to somewhere else—if you run very fast for a long time, as we’ve been doing.”

“A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

Sound familiar? Financial life can easily become that way. Work hard. Work long. Seem to get nowhere.

Financial planning is an antidote to the condition. It helps you avoid unreasonable expectations.

In financial planning there is effort directed to balancing the essential parts of spending against income. Think time.

The present represents current lifestyle. The price of consumption. The things that are used up immediately. Food, clothing, fuel, recreation, vacations, cars, house expenses and more.

The past involves debt and other obligations. If you incur debt there will be an automatic and relentless call on future earnings to deal with it. Same thing with family or a church.

The future involves having money to spend on lifestyle when there is no current earnings to provide it. If you aren’t working, your money better be. Savings.

The government and possibly unions, or professional bodies will require part of your earnings.

If you want to avoid staying where you are, you must run faster. More hours, more risk, better negotiation. Sometimes faster is not available. Then what?

Financial independence means being able to avoid the race entirely.

Financial independence begins very early. Value saving. The first decision is to avoid debt and minimize lifestyle. Save a large share of your income. In doing that the financial accumulation grows fast enough that earnings from it powers the growth. Your money grows without your being involved in any race.

Escalate lifestyle slowly, learn about investing and taxes. Incur no debt that cannot pay its own way. Reduced expenses or higher earnings result in the same end.

Financial planning usually deals with five layers.

Control Time

Control Debt

Build Income Producing Assets

Build Growth Assets

Acquire aesthetically pleasing assets.

Tomorrow we will talk about the first layer. Controlling time

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.